“The world is becoming multi-polar, but it is also multi-connected. What’s next after the Brexit and the UK economy? Banks have an important role in interlinking in order to support different communities in different countries that may be in the developing world. I’m proud to say that SWIFT is supporting market infrastructure in many countries in a world that will move to multi-laterality.” This is how Alain Raes from SWIFT opened the session on After the Brexit, what’s next: A BRICS-it towards a multilateral financial system? Representatives from Brazil, Russia, India and South Africa were present at this panel and they all had a similar attitude towards working together to achieve success.
BRICS countries represent 43% of the world’s population and as Eddie Astanin, Chairman of the Executive Board at the National Settlement Depository highlighted, being a part of this group is a “good symbol of the cooperation between countries and this is evident because of similar political and economic agendas.” Strate’s CEO Monica Singer agreed with this and said that all countries have a common need and work together because it makes sense to. “In South Africa we have a word called ‘Ubuntu’, it means ‘I am because you are’ and that resonates with us.” She went on to say that if the presidents of each country can work together, why can’t we? These countries are open to conversation and this freedom is infiltrated into the psyche.
Competitors or friends?
Luiz Felipe Paiva from BM&FOVESPA explained that the countries are of course competitors, but historically have a close relationship. India’s Ashwani Kumar from Dena Bank also had the same attitude and said that being a BRICS country is “a sign of stability” and said that it is “too soon to think about a BRIC-it.” In addition to having a good working relationship, Singer addressed the idea of sharing benefits in terms of technology and networks – this is another way that distributed ledger technology can be beneficial.
A conference like Sibos is real proof that the global market is connected, but there is a lot of reform within the markets because of new regulations and new companies having to comply with them. In the financial space, having the same sort of connectivity is not an easy job and to also get all the venture capitalists together is proving to be even harder. Kumar spoke about how in India there are plans to provide every individual with an ‘aadhar’ number, which would act as a unique ID and this should plug a lot of data leakages in existing processes. With this, not everyone will need a smartphone which really helps those who are not financially included at present.
Singer stated that although politicians should get involved in the future of finance and technology, the difference between BRICS countries and others is massive. “Ministers have not realised that you cannot build a wall like Trump wants and keep people out. They do not understand that if people were happy in their own country, they would not move,” – which relates to pressures around countries supporting each other effectively.
Lessons learnt from Brexit
The Brexit has taught us that a multilateral system should be adopted and it should become something people understand. Singer said that a simple contract should be invented: “fintechs do it differently, they wouldn’t invent all the regulations before inventing the product.” Astanin explored how Russia are expecting to go through turbulent times post-Brexit and could lose up to 1% of their economy. However, “from an infrastructure perspective, it is not a problem. Politicians determine the agenda for financial markets and not the other way around. Brexit is a political problem, not a business one.”
Paiva said that Brazil was waiting for something to happen, but it never did and this shows that their market infrastructure is advanced enough to support itself when events like this occur. Kumar said that capital moves where it is safe and as India is seen as a stable country, the capital usually spent elsewhere could move to the sub-continent.